Regulatory Alignment

Neobanks are regulated entities. The infrastructure you build on shapes your compliance posture. The past few years showed what happens when platforms co-mingle customer funds. FTX pooled user assets with its trading arm and collapsed, resulting in a $12.7 billion CFTC judgment. Celsius co-mingled deposits, and a court ruled those assets belonged to the company’s estate, not to customers. Users became unsecured creditors. Blend’s architecture avoids both failure modes by design. Every user gets their own isolated Safe. Funds are never pooled, never co-mingled, and never held by Blend.

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Non-custodial by design

The regulatory test is the same everywhere: can the protocol move user assets without the user’s approval? If not, there is no custody relationship. Blend passes this test at every level:

• Isolated Safes. Each user gets their own Gnosis Safe. No shared pools. No omnibus accounts.
• Non-upgradable contracts. All Blend contracts are immutable. No proxy upgrades, no admin keys, no backdoors.
• Timelocked changes. New whitelisted vault actions go through a multi-day timelock before they take effect. Your neobank can opt out of any new action before it goes live.
• No arbitrary actions. Blend cannot perform actions outside the pre-approved, whitelisted set. There is no admin key. There is no override.

This is not a policy choice. It is a structural property of the protocol. Blend does not custody user funds because it cannot custody user funds.

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United States

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Stablecoin legislation

Two bills are shaping the US stablecoin landscape: Both bills target stablecoin issuers (Circle, Tether), not platforms or protocols. They require 1:1 reserve backing and segregation of issuer reserves from operating funds. Neither bill directly regulates non-custodial infrastructure like Blend. However, both signal a clear preference for per-user fund segregation over omnibus structures. Blend’s SMA model aligns with this direction.

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Federal agencies

• SEC. Rescinded SAB 121 in January 2025, removing the accounting rule that made crypto custody prohibitively expensive for banks. The current administration has taken a more accommodating stance toward digital assets.
• OCC. Interpretive Letter 1183 (March 2025) removed the prior-approval requirement for banks engaging in crypto custody and stablecoin activities. This makes it easier for your banking partners to work with on-chain infrastructure.
• FinCEN. 2019 guidance on convertible virtual currencies states that non-custodial software developers are not money transmitters, provided they do not have “independent control” over user funds.

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State level

• New York (BitLicense). Requires licensing for “virtual currency business activity” involving NY residents. Non-custodial protocols that never possess or control user funds may fall outside this requirement, though NYDFS interprets “control” broadly.
• Wyoming. The most crypto-friendly state. Special Purpose Depository Institution (SPDI) charters for digital asset businesses. First state to legally recognize DAOs as LLCs.
• California. Digital Financial Assets Law (AB 39) took effect July 2025, requiring licensing for digital financial asset businesses.

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European Union

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MiCA (Markets in Crypto-Assets Regulation)

MiCA is the EU’s comprehensive crypto regulatory framework. For non-custodial protocols, the key provision is Recital 83, which explicitly excludes non-custodial wallet providers from custody regulation. The test is control. MiCA Article 3(1)(17) defines custody as “safekeeping or controlling crypto-assets on behalf of clients.” If the protocol cannot move assets without user approval, no custody relationship exists. Article 75 (custody segregation) requires on-chain segregation of client assets from CASP assets. Blend’s SMA model satisfies this by design, since each user’s funds sit in their own isolated Safe. Even if custody rules applied, the architecture already meets them.

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Stablecoins under MiCA

Blend supports MiCA-compliant stablecoins for EU market access.

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Other EU regulations

• TFR / Travel Rule (effective December 2024). Requires originator and beneficiary info for crypto transfers via CASPs. Transfers between self-hosted wallets are exempt. The neobank (as the CASP) bears this obligation.
• DORA (effective January 2025). Applies to CASPs. If Blend is not classified as a CASP, DORA does not apply directly. Neobank partners must manage third-party ICT risk as part of their DORA obligations.
• AMLR (effective July 2027). Self-custodial wallets above EUR 1,000 will trigger enhanced due diligence when interacting with regulated entities. Peer-to-peer and self-custody use remain unrestricted.

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Member states

• France. PACTE/PSAN regime valid until July 2026. Fast-track MiCA authorization available.
• Germany. BaFin crypto custody license with EUR 150,000 minimum capital. MiCA transition deadline December 2025.

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Global

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Singapore

MAS regulates digital payment token custody under the Payment Services Act (amended April 2024). Non-custodial protocols are assessed on the degree of control over user assets. XSGD (issued by StraitsX) is substantively compliant with the MAS Single-Currency Stablecoin framework (finalized August 2023). Reserves are held at DBS and Standard Chartered.

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Brazil

BCB Resolutions 519, 520, and 521 (effective February 2026) mandate segregation of client assets from firm assets. Stablecoin transactions are classified as foreign exchange operations. BRZ (issued by Transfero) will be treated as an FX instrument under this framework. Firms must be authorized by November 2026 or cease operations.

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United Kingdom

The Property (Digital Assets etc) Act 2025 (Royal Assent December 2025) recognizes crypto as a third category of personal property under English law. This strengthens the legal argument that assets in a user’s Safe belong to the user. FCA custody rules (CASS 16/17 chapters) are expected to take effect October 2027.

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FATF

The Financial Action Task Force guidance (updated June 2025) states that DeFi software itself is not a Virtual Asset Service Provider (VASP). Software developers are not VASPs. However, “creators, owners, and operators who maintain control or sufficient influence” over a protocol may be classified as VASPs. The indicators include: ability to upgrade contracts, freeze funds, or control access. Blend’s non-upgradable contracts and absence of admin keys place it outside these indicators.

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What Blend’s architecture gives you

Building on Blend means your compliance posture starts from a strong foundation:

• Per-user fund isolation. Each user’s assets sit in their own Safe. No co-mingling.
• Non-custodial classification. Immutable contracts, no admin keys, and timelocked changes support non-custodial status across jurisdictions.
• On-chain audit trail. Every action on every Safe is recorded on-chain and verifiable.
• MiCA-compliant stablecoins. USDC, EURC, and other supported tokens meet regulatory requirements in their respective markets.
• Structural segregation. You get fund segregation as a property of the architecture, not as an operational process you have to manage.
• Neobank opt-out. Your neobank controls which whitelisted vault actions apply to your users. New actions require your approval through the timelock.